Domestic market price of AHF continually drops in July 2013

The domestic market price of anhydrous hydrogen fluoride (AHF) in China in July 2013 was about USD1,120/t, down by 3.03% compared with that in June 2013, when it stood at about USD1,155/t. Actually, its market price has been decreasing continuously for four months since March 2013 when it reached USD1,257/t, the highest level in the first seven months of 2013, according to China Fluoride Materials Monthly Report issued by CCM in August.

The continuous fall of AHF's market price in China in July 2013 was mainly caused by the following two reasons.

First, the cost of fluorite kept decreasing during the period. In July 2013, the average market price of fluorite (CaF2>97%), the major raw material of AHF, dropped by 5.45% month on month. Domestic fluorite producers kept their operating rate of the product at a high level because of the suitable weather for production, which led to a high inventory. However, the market demand for fluorite did not increase because of the flagging domestic economy. Therefore, the oversupply of fluorite led to a continuous fall of its market price.

Second, the market demand for AHF from downstream industries in July 2013 was quite weak. In H1 2013, the overcapacity of the aluminum fluoride (AlF3) industry was still serious, which led to a low operating rate. Under the circumstance, the demand for AHF from the AlF3 industry largely declined. Moreover, the operating rate of the refrigerant industry in China in July 2013 was also low. Some refrigerants enterprises even shut down their production lines because of the shrinking profits. For instance, Shandong Dongyue Group Co., Ltd. shut down its 1,1,1,2-tetrafluoroethane (R134a) production lines on July 19, 2013 and may resume production in the middle of Aug. 2013.

Along with the continually decreasing market price and weak demand, AHF producers have reduced their operating rate. In July 2013, the average operating rate of domestic AHF enterprises was 46.80%, decreasing by 2.92% month on month. Some of the enterprises in North China, especially in Inner Mongolia, have shut down their production lines to alleviate their inventory pressure.

The market situation of AHF in South China is better than that in North China. As a matter of fact, most of the refrigerant producers are located in South China, where AHF producers have an obvious price superiority compared with that in North China, thanks to lower transportation costs. It's estimated that the market price of AHF in South China in July 2013 was USD80/t lower than that in North China.

It is estimated that the market price of AHF in China in Aug. 2013 will continually drop slightly. On one hand, the market demand for AHF will still stay at a low level because of the weak economy. There is no signal that producers of its downstream industries like AlF3 and refrigerants will increase their operating rates in Aug. 2013. On the other hand, the market price of its raw materials like fluorite will continually fall because of the high inventory.